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The Australian dollar has finished making profits, and the mysterious indicators suggest that the Australian dollar continues to be bullish?
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Hello everyone, today XM Forex will bring you "[XM Forex Decision Analysis]: The Australian dollar has made a profit, and the mysterious indicators imply that it will continue to be bullish on the Australian dollar?". Hope it will be helpful to you! The original content is as follows:
On the eve of the Federal Reserve's FOMC meeting on Monday (September 15), the Australian dollar maintained a strong rise of 0.18% against the US dollar during the European session, trading around 0.6658, and the Australian dollar against the US dollar exchange rate remained at a few months high range. Large speculators on the position side reduced short orders and asset management www.xm-forex.companies expanded shorts expressed differences on the Australian dollar trend, but the market's bets on the Federal Reserve's interest rate cut, risk reversal of options trends and implicit volatility changes, jointly provided support for the subsequent rise of the Australian dollar.
U.S. consumer confidence data performance and market impact
Recent consumer confidence data released by the United States showed that the decline in consumer confidence exceeded market expectations and fell to a four-month low. Among them, the University of Michigan's consumer confidence index fell from 58.2 last month to 55.4, far lower than the market consensus estimate of 58.0.
From consumer feedback, rising prices have prompted them to reduce consumption behavior, and the reduction in consumption has put pressure on economic growth. 60% of respondents clearly listed trade tariffs as the core concern; although short-term inflation expectations remain stable, the market's expectations of further increase in long-term price pressure has not changed.
The above data www.xm-forex.combined with moderate inflation data released earlier in the week basically confirms that the Fed will implement a 25 basis point rate cut on Wednesday, and it is highly likely to release a loose signal in interest rate expectations and Powell's speech - this result will create clear negative pressure on the US dollar and support the Australian dollar's trend.
The Fed's decision-making logic and political pressure considerations
The deterioration of employment data could have been a reasonable basis for this measure, but judging from the central bank's decision-making logic, the Fed may have implemented only a 25 basis point interest rate cut due to policy consistency and the face of the central bank.
RequiredIt is noted that Powell is currently facing political pressure from the Trump administration - if the interest rate cut is 50 basis points, it may not only confirm the president's view that the Fed is "too slow to be easing" and may also trigger unnecessary panic in the market; and the 25 basis points rate cut can not only make the Fed fit the external image of both policy tone and maintain its decision-making independence.
Futures market pricing: 25 basis points interest rate cuts in September have become the mainstream expectation, and there is still room for easing in the future. Judging from the implicit pricing of federal funds rate futures, the probability of the Federal Reserve cutting interest rate by 25 basis points in September has reached 96.4%, and the probability of a 25 basis points drop in October and December is about 80%; but the market's expectations for further interest rate cuts in March and after next year are both lower than 50%.
This shows that this week's FOMC meeting will become a key node for the Federal Reserve to reshape the interest rate outlook - it can convey clear policy orientation to the market by updating the Staff Economic Forecast (SEP) and Powell's press conference.
At the same time, the RBA lowered its key interest rate to 3.6% at its August interest rate meeting, and policymakers said in the minutes that this interest rate level "is still somewhat restrictive." In view of the continued decline of underlying inflation to the median target range of 2-3% and the labour market loosened slightly as expected, the Council believes that further easing of monetary policy is appropriate." The central bank added: "Given the high uncertainty of total demand and potential supply, the Council remains cautious about the economic outlook."
Although the RBA also has the possibility of interest rate cuts, the Australian dollar has performed strongly against the dollar as the expectation of the Fed's opening of interest rate cuts continue to be bet by traders.
There are differences in the options market
Australia dollar against US dollar futures positions-the position report (COTReport) shows that there are differences between institutions, but in the end, the Australian dollar futures positions only slightly adjusted.
The large speculators have reduced their net short positions for the second consecutive week, reducing their size to 3,500 contracts. The segmented data shows that long contracts have increased by 2,500 (8.5%) and short contracts have decreased by 1,000 (0.8%).
Asset management www.xm-forex.company expanded its net short positions by 2,300 contracts. Specifically, long contracts increased by 398 (1%), but short contracts increased by more significant, reaching 2,700 (2.5%).
It should be noted that the position data only covered last Tuesday and was not included in the market that pushed the Australian dollar to rise by 1.3% against the US dollar due to the weakening of the US dollar. Therefore, the current net short position of the Australian dollar has been more likely to shrink further.
The options market and implicit volatility support the exchange rate
The performance of the options market also supports this judgment: the risk reversal options with the spot exchange rate rose simultaneously, confirming the market's bullish tendency. It should be noted that although the Australian dollar-USD risk reversal option is still in a negative range (i.e., from the absolute scale, put options (bearing bets) are still more than call options (boost bets)),The upward trend shows that in contrast, demand for call options is gradually increasing.
The implicit volatility and risk reversal of the Australian dollar against the US dollar have supported the rise of the Australian dollar in recent months. The continued decline in the implicit volatility of the Australian dollar against the US dollar suggests that the market has a good acceptance of the decline of the Australian dollar. Although this trend may strengthen the market's www.xm-forex.complacency with long trading in the Australian dollar and put the Australian dollar at risk of sudden shocks, it provides the basis for the upward trend of the Australian dollar from the current trend.
Outlook for the Australian dollar against Canadian dollar under the Bank of Canada's easing expectations
According to the Bank of Canada (BoC) easing expectations, the Australian dollar against Canadian dollar bull target points to the 0.94 mark. The market's expectations for the Bank of Canada (BoC) rate cut of 25 basis points are also strong. The weak employment data in July and August further strengthened this logic, and the probability of interest rate cuts implicitly in swap contracts has reached 84%.
If the Bank of Canada releases loose guidance in this resolution, the Australian dollar against the Canadian dollar may push the exchange rate to break through the previous fluctuation range and launch an impact on the 0.94 mark.
Technical Analysis of the Australian dollar against the US dollar
Australia bulls ushered in a breakthrough of 0.6624 last week as they wished. From the technical perspective, this breakthrough was formed after a few weeks of retracement with a shallow amplitude, which shows that it may be in the early stages of the next upward trend.
Although the short-term bullish structure is clear, bulls need to focus on the key 0.6652 mark - the 200-week simple moving average (SMA) and the exponential moving average (EMA) intersect and superimpose here, which is likely to constitute a key short-term resistance. Any subsequent pullback is likely to not be too deep, and market buying may take the opportunity to intervene at a low level, pushing the Australian dollar against the US dollar to gradually approach the weekly volume-intensive area.
As long as the price continues to stabilize above the low point of 0.6580, the overall pattern will remain bullish; at the same time, the July high (0.6624) also forms short-term support simultaneously. If the price can continue to break through and stand firm above 0.6677, it will open upward space for the Australian dollar to rise to the 0.6900 mark against the US dollar and the 2024 high (0.6942).
The above content is all about "[XM Forex Decision Analysis]: I want to settle the profits of the Australian dollar, and the mysterious indicators imply that I will continue to be bullish on the Australian dollar?" is carefully www.xm-forex.compiled and edited by the editor of XM Forex. I hope it will be helpful to your trading! Thanks for the support!
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